This James Fallows article, The $1.4 Trillion Question, should be read by every American. Why?
Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China. Like so many imbalances in economics, this one can’t go on indefinitely, and therefore won’t. But the way it ends—suddenly versus gradually, for predictable reasons versus during a panic—will make an enormous difference to the U.S. and Chinese economies over the next few years, to say nothing of bystanders in Europe and elsewhere.
It’s incredibly hard not to quote the whole thing. In short, China affects the daily lives of Americans, and America affects the daily lives of the Chinese. The Chinese are beginning to understand this, but Americans seem blissfully ignorant (if not of the relationship, then definitely the possibly consequences). Seriously, take 15 minutes and give this a read. And then send the link to your friends.
Photo: The (decidedly privileged) Bund, Shanghai, 2004